Discuss the provision for funding of R&D projects under various schemes of the Government of India. Also, critically comment upon them.

MS 58 Assignment Solution | Management of R&D And Innovation | The Provision for funding of R&D projects…

Innovation and development is a vital drivers of economic growth and stability, ushering in economic and social prosperity. New ideas and products act as catalysts for a set of new goods and services that could change the economy and increase employment. Further, businesses are better positioned to compete in the global marketplace with constant R&D investments at the proper levels.

Therefore, to get the best competitive advantage and keep the business continually growing, investments in research and development must be continuously made. In this article, we look at some of the ways of securing funding for research and development of a new product or a new process, or new system.

SIDBI Revolving Fund for Technology Innovation (SRIJAN Scheme) 

SIDBI provides financial assistance to MSMEs towards the development, scaling up, demonstration, and commercialization of innovative technology-based projects. The financial assistance is provided in the form of early-stage debt funding on softer terms for the development, demonstration, and commercialization of new innovations in emerging technological areas, un-proven technologies, new products, processes, etc. which have not been successfully commercialized so far. The maximum loan amount provided is generally not more than Rs.100 lakhs per project at a concessional rate of interest of not more than 5% per annum. 

Assistance up to 80% of the total project cost is normally considered and in certain cases, higher amounts of assistance are considered based on the innovative content of the project. Costs covered under the SRIJAN Scheme include:

• Capital expenditure e.g. factory shed for the project, plants & machinery, utilities, etc.,

• Intangibles e.g. patents/ copyrights / R&D / technology transfer fee / licensing/Marketing

• Working capital margin

• Pre-operative expenses

• Manpower cost

• Contingencies / Any other heads required for the project

A maximum loan repayment period of 6 years is available including a moratorium. Security to be given to the bank for the loan are the first charge on assets (both moveable/immoveable) created / to be created under the project, first / pari passu / second charge on other assets of the unit depending upon prior charge created/ to be created, personal guarantees of promoters.

Know more about SIDBI SRIJAN Scheme 

Assistance from Technology Development Board

The Technology Development Board aims to accelerate the development and commercialization of indigenous technology or adapt imported technology to wider domestic applications. The Board plays a proactive role by encouraging commercial enterprises to take up technology-oriented projects and provides financial assistance in the form of Equity, Soft loans, or Grants.

The loan or equity capital provided by TDB to industrial concerns and financial assistance to research and development institutions is provided at a simple interest of 5 percent per annum and TDB does not levy processing, administrative or commitment charges. The quantum of loans will be, normally, limited to up to 50 percent of the approved project cost. The duration of the project should not generally exceed three years.

The loan is payable in installments that link to risk-associated milestones in accordance with the terms and conditions of the loan agreement. The refund of the loan and payment of interest commences one year after the project completion and the full loan amount is recoverable in five years thereafter. In some cases, TDB may have nominee director(s) on the Board of Directors of the assisted industrial concern. 

TDB may also subscribe by way of equity capital in an industrial concern, during its commencement, start-up, and/or growth stages. The full Board of TDB decides the equity subscription. It is up to 25 percent of the approved project cost provided such investment does not exceed the capital paid up by the promoters. The pre-subscription conditions include that the promoters should have subscribed and fully paid up their portion of the share capital.

Wrapped Up

• For More BSCG Assignments – BSCG Solved Assignment
• For Hand Written Assignments – Click here

For more Updates join our Telegram Group and also for your inquiry you may comment here or mail us –info@ignouassignmentssolutions.in
Telegram Group – Click Here